Federal Public Procurement Tribunal decides: Rebate contracts awarded by health insurance funds are public contracts

On 15 November 2007 the 2nd Federal Public Procurement Tribunal decided in seven review procedures that rebate contracts awarded to pharmaceutical manufacturers by the statutory health insurance funds are public contracts within the meaning of Section 130a (8) of the German Code of Social Law (Book V). Accordingly, the statutory health insurance funds must observe the public procurement provisions of the Act against Restraints of Competition as well as the contracting rules for the award of service contracts (VOL/A) when concluding rebate contracts for pharmaceuticals in excess of the thresholds stipulated by law.

The Public Procurement Tribunals categorise the rebate contracts as public contracts because from an economic aspect they represent framework agreements for the procurement of pharmaceuticals for contributors to the statutory health funds. The rebate contracts not only stipulate the rebates paid by the pharmaceutical companies but also contain mutual obligations to render services and to pay remuneration.

The background behind this is that statutory health insurance funds are not only acting as accounting centres but by awarding rebate contracts also control the procurement requirements for their contributors. Hereby, according to the aut idem regulation, the pharmacist is obliged to substitute a prescribed drug with a pharmaceutical containing the same substance and for which a rebate agreement exists.

In this connection the Public Procurement Tribunal has decided that disputes about the award of rebate contracts by statutory health insurance funds are not to be assigned to the social courts. The public procurement provisions of the ARC, which were introduced in 1999 and which are based on European law, stipulate that the public procurement tribunals should have independent and exclusive jurisdiction in matters concerning public contracts. The purchasing behaviour of statutory health insurance funds is therefore, upon request, subject to control under public procurement law by the public procurement tribunals.

In the cases decided upon, the envisaged rebate contracts were for 83 substances. In their procurement practice the health insurance funds violated various aspects of public procurement law. The Public Procurement Tribunal has therefore prohibited the award for the substances objected to in the respective proceedings. The decisions are not yet final and can be immediately appealed before the Düsseldorf Higher Regional Court within a period of two weeks.